Health Savings Account
Penn State employees who enroll in the PPO Savings Plan will automatically have a Bank of America Health Savings Account (HSA) created on their behalf.
The HSA, administered by Highmark, may be used to pay for eligible health care expenses
Visit Highmark's HSA website to manage and learn more about Health Savings Accounts
Features of HSAs:
- Account holders may contribute to an HSA on a pre-tax basis with payroll deductions
- Both the account holder and the employer may contribute to an HSA
- Funds in the HSA can be withdrawn tax-free to pay for eligible health care expenses
- The balance rolls over from year to year and grows tax-free with interest, allowing account holders to build savings over time
- Account holders decide how much to contribute to their HSA, up to the annual IRS maximums, and may change their contributions at anytime during the plan year
- HSA funds may be used today as needed, or may be left in the account to grow future savings
- The account holder may keep the funds in the event he/she retires from or leaves Penn State, or switches health plans at Open Enrollment each year
Understanding Health Savings Accounts
Under the PPO Savings plan, both the account holder and the employer may make contributions to the account. For the 2016 plan year, Penn State will contribute $800 to the HSA of employees who have elected the family plan and $400 to the accounts of those who have elected the Individual plan. Account holders are not required to make contributions to the account.
If an employee's HSA is not established with Bank of America by December 15 of any given year and that person is eligible for the Penn State contribution, he/she will receive the contribution in the following calendar/tax year, provided that the HSA is established at that time.
Account holders must have the money in their HSA before it is available for use.
For example, if an individual has used all of the available funds in his/her account and that person then receives a medical bill for $80, he/she cannot pay the claim from of the HSA until there are sufficient funds in the account to cover the bill.
Account holders will be issued a debit card which may be used to pay for medical claims. While HSA members do not have to substantiate purchases made with their HSA debit card, it is recommended that they keep all receipts in the event of an IRS audit.
With the Bank of America HSA, all banking regulations apply and no funds will be deposited until the account is established.
Bank of America charges a monthly account maintenance fee of $3.00, which will be automatically deducted from the account.
Account holders may transfer the monies deposited into their Penn State HSA to the HSA of their choice.
All costs associated with the transfer will be incurred by the account holder, who will also be responsible for closing the HSA account with Bank of America and working with their tax adviser to obtain any tax credit. Individuals who fail to close the BOA account in one year and who enroll in the HSA again in the following year may be subject to a BOA deduction of unpaid $3.00 fees accrued against the account.
Eligibility Requirements for the PPO Savings Plan with the Health Savings Account (HSA)
All full-time, benefits-eligible employees are eligible, however, the EMPLOYEE:
- CANNOT be enrolled in Medicare or be collecting Social Security benefits. It is recommended that employees who are returning from retirement consult with their financial advisor regarding implications of dis-enrolling from Medicare in order to be eligible for the HSA, as they will not be able to collect Social Security benefits unless they are enrolled in Medicare. Once an individual dis-enrolls from Medicare, that person is able to contribute to the HSA.
- CANNOT be enrolled in another health plan
- CANNOT have a balance in a HEALTH CARE Flexible Spending Account
- CANNOT have a J1 Visa - J1 Visa holders are eligible for the PPO Blue plan only
Due to IRS regulations governing HSA plans, PPO Savings Plan members are not eligible to enroll in the Health Care Flexible Spending Account (FSA). If an employee currently has money in a Health Care FSA—either through themselves or through a spouse who has elected the PPO Savings Plan—that person must use all of the money in the account before enrolling in the PPO Savings Plan. An FSA that has had a contribution added within 90 days of opening is considered an active account.
If two Penn State employees are married and have elected FAMILY coverage under the PPO Savings Plan with an HSA, a Health care Flexible Spending Account (FSA) cannot be opened under either employee's name. The IRS does not permit use of a health care FSA when enrolled in an HSA. The Dependent Care FSA is available to either employee up to the IRS limits, however.
Making Contributions to a Health Savings Account
As part of the enrollment in an PPO Savings Plan an HSA will be automatically opened on the employee's behalf and Penn State will make a contribution to the account that is available to use right away for eligible health care expenses.
For the 2016 plan year, Penn State will contribute $800 to the HSA of employees who have elected Family coverage and $400 to the accounts of those who have elected the Individual plan.
The maximum annual Penn State HSA contribution per family is $800 combined. If an employee elects Family coverage under the PPO Savings Plan and has received the $800 contribution towards his/her HSA during the calendar year, that person's family is not eligible for any additional Penn State contribution in the event his/her spouse becomes an employee of the University during the same calendar year.
In addition, employees who are enrolled in the PPO Savings Plan may make a separate election to contribute funds to the account through payroll deduction.
When enrolling in the PPO Savings plan in ESSIC, the employee will be asked to amount of the per paycheck contribution that they would like to make to the HSA.
For 2016, the maximum HSA contribution as per the IRS is $3,350 for Individual coverage and $6,750 for Family coverage. The maximum contribution includes both Penn State’s contribution and the employee's own election.
Account holders are not required to make contributions to the account.
If an employee's HSA is not established with Bank of America by December 15 of any given year, and that person is eligible for the Penn State contribution, he/she will receive the contribution in the following calendar/tax year, provided that the HSA is established at that time.
HSA account contributions made by employees through payroll deduction will be available for use within 5 business days of the actual pay date.
For example, if the pay date is a Friday, the HSA funds will be in the account by the following Friday.
|Type of coverage:||2016 Penn State Contribution:|
|Family (also includes 2-person parent/child/children)||$800|
Paying for Medical Expenses with the HSA
Qualified medical expenses are those incurred by the following individuals:
- Employee and spouse
- Dependents who are claimed on the account holder's tax return
- Any person claimed as a dependent on the account holder's tax return except if:
- the person filed a joint tax return
- the person had a gross income of $3,900 or more
- the account holder, or the account holder's spouse if filling jointly, could be claimed as a dependent on someone else's tax return
Please use the following link for the most up-to-date version of Highmark's Health Savings Account (HSA) claim form. Those who need assistance with locating a Highmark form should contact Highmark directly at (800) 914-4384.
Per IRS regulations, HSA reimbursements are allowed only on a tax-free basis for expenses incurred by tax dependents, which include individuals up to age 19, or up to age 24 for full-time students.
Expenses for non-tax dependents, such as a non-disabled child age 25 or 26 who does not meet the IRS criteria for tax dependent status, generally may not be reimbursed on a tax-free basis from an HSA even if the non-tax dependents are covered by the employee's medical plan. Note that various factors (such as the child's age and level of financial support provided by the employee) will impact whether the child qualifies as the employee's tax dependent and it is the employee’s responsibility to know and understand who is and is not eligible to have expenses paid through the HSA. (This rule differs from Penn State’s eligibility rules for dependents, as adult children up to age 26 are eligible for coverage on the medical, dental and vision plans.) It is recommended that an employee contacts his/her tax advisor for further information regarding this specific provision.
Changing The HSA Contribution
Contribution amount changes may be made on a monthly basis by completing a 2016 Health Savings Account (HSA) Contribution Election Agreement.
Changes will become effective on the next available payroll.
Employees are responsible for ensuring that the annual maximum IRS contribution limit is not exceeded. Penn State is not responsible for tax consequences as a result of the employee contributing beyond the annual IRS contribution limit. The Penn State contribution is included in the annual IRS contribution limit.
In 2016, employees cannot contribute on a pre-tax deduction basis more than $2,950 if enrolled in Individual coverage in the PPO Savings Plan or $5,950 if enrolled in Family coverage in the PPO Savings Plan. Any HSA contributions made directly to Bank of America also must be taken into consideration when determining whether the annual contribution limit has been exceeded.
Individuals who will be age 55 or older before the end of 2016 and who are not enrolled in Medicare may contribute up to an additional $1,000 in “catch-up” contributions to an HSA. These individuals will have a maximum contribution of $4,350 for Individual coverage and $7,750 for Family coverage. If the employee covers a spouse who will be 55 or older in 2016 and who is not covered by Medicare, the employee may open a Health Savings Account on their behalf through another qualified financial institution and deposit an additional $1,000. This additional amount will not be payroll-deducted and therefore should be arranged directly through the financial institution of choice.
Tax Information for 2015 HSA Members
Individuals who were PPO Savings plan members 2015 will receive two tax documents from Bank of America during the 2016 benefit year:
Form 1099SA: Mailed in January of each year and shows HSA distributions for the tax year. Even though account holders are not taxed on the funds in the account, this form is to be filed with the individual's annual tax forms. If no funds were used from the account in 2015, no form will be sent.
Form 5498SA: Mailed in May of each year and shows your HSA contributions for the tax year. This form is NOT filed with the individual's annual taxes, but is for their records only.
Interest Rates & Contribution Limits
|Less than $2,500.01||0.10%||0.10%|
|$2,500.01 to $10,000||0.20%||0.20%|
|$10,000.01 and over||0.30%||0.30%|
The annual percentage yield (APY) shown is as of 5/1/2014. The interest rate and APY may change after the account is opened. There is no minimum balance required to open the account. Fees may reduce earnings.
|Maximum Contribution Limits for:||2015||2016|
* If you are age 55 or older, you can make an additional catch-up contribution.
Schedule of Fees
This schedule of fees is part of the contract for your Health Savings Account with Bank of America. For other terms and conditions governing your account, please see the Custodial Agreement.
|Monthly Maintenance Fee||$3.00|
|Deposited item returned||$5.00/item|
|Contribution deposit slips re-orders, per 15 slips||$5.00|
|Legal process fee (e.g., attachment, levy or garnishment), per occurrence||$75.00*|
|Stop payment, each||$25,00|
|Excess contribution, per return||$25.00|
|Copy of account statement, each||$5.00|
|Copy of deposited item, each||$3.00|
|Copy of tax statement, each||$5.00|
For more information, contact Bank of America, using the number on the back of your card.
Employees who Switch Health Plans, Leave Penn State or Retire
Employees who change health plans, leave, or retire from Penn State will not experience any changes to the management of their HSA. At the termination of the employee's Penn State medical coverage, the HSA becomes a "stand alone" HSA with Bank of America. Account holders with stand-alone HSAs will have the following:
- Keep the same account number
- Be able to manage their account through the Highmark website
- Have access to customer service at Highmark at 800-914-4384
- Be assessed a $4.50 monthly fee for their account
Employees who leave the University and who wish to transfer your HSA funds from Bank of America to another HSA account should use this form.
Employees who have an HSA from another employer or institution may move their funds INTO the Highmark Bank of America HSA by completing this form.